S.Korea's nuclear power at inflection point as advocate wins presidency

Korea Electric Power

11/03/2022 07:06

* President-elect Yoon pledged to lift nuclear power in
energy mix
    * Low-cost, stable electricity key to chipmakers like
Samsung
    * Past 'exit' policy led to manpower, business drain, say
experts

    By Joyce Lee
    SEOUL, March 11 (Reuters) - South Korea's nuclear power
industry is at an inflection point after Yoon Suk-yeol triumphed
in the nation's presidential vote this week, as a platform
pledge to revive the fortunes of a once-dominant sector faces
stiff business hurdles.
    It's the second U-turn in less than a decade for the
industry, which has been left in tatters with major talent and
business losses during liberal President Moon Jae-in's policy to
"exit" nuclear energy. 
    Yoon has rejected the idea of phasing out nuclear energy and
made it a key pledge of his campaign to boost investment in the
industry and restore its earlier preeminence as an exporter of
lean and safe reactors. 
    The rethink of the country's energy mix comes at a time the
crisis in Ukraine has highlighted the risks of over-reliance on
imports of oil and gas and the EU's inclusion of nuclear power
in sustainable carbon neutrality goals.
    But policy uncertainty caused by a constitutional limit of a
single five-year presidential term has magnified the business
risks in an industry that relies on long-term investment and 
commitment. 
    "We've lost all capacity for construction. Others have lost
80% of revenue," said Cho Seung-eun, CEO of Moojin Keeyeon, a
nuclear power subcontractor whose 100 employees five years ago
have dwindled to 50. 
    "Nuclear plants take 3-4 years of advance planning, so five
years mean a lot of manpower left for jobs with clearer future,
took their expertise with them."  
        
    SWEEPING PROMISES
    Those challenges sit uncomfortably with Yoon's sweeping
pledges.
    Currently, nuclear power makes up roughly 27% of the
country's power mix, with 35% coal and 29% liquefied natural
gas. 
    Yoon has promised to lift nuclear power's contribution to
30% by restarting construction and extending reactors' lives,
and export 10 nuclear power plants by 2030. 
    However, success is by no means assured, say industry
experts, who credit nuclear energy with playing a major role in
powering the growth of key South Korean industries such as
semiconductors to global success. 
    "Nuclear power has played a big role in providing low-cost
electricity 24-hours-a-day," said Yang-Hoon Sonn, professor of
economics at Incheon National University. 
    "But the decision to 'exit' nuclear power, plus the global
direction away from fossil fuels, led to an overt focus on
renewable energy that severely weakened the utilities operator's
finances and was not letting Korea do what it does well - build
nuclear plants." 
    The nation is the fifth-largest nuclear power generator
after the United States, China, France and Russia, according to
International Atomic Energy Agency data. 
    It has 24 reactors and six that began construction, but work
to lengthen the life of existing reactors or finish constructing
new ones had dwindled sharply during the Moon administration,
industry sources said. 
    
    NO MORE LOW COST POWER?
    South Korea's "net zero scenario" announced during Moon's
administration projected nuclear power in 2050 electricity
demand at 6.1%-7.2%; renewable energy at 60.9-70.8%. 
    Nuclear proponents say South Korea's small land mass - about
the size of the U.S. state of Indiana - and changeable weather
means solar, wind or geothermal power won't be a viable
alternative for many more years. 
    Nuclear power cost 61.5 won per kWh, while solar power cost
149.9 won in January according to Korea Power Exchange. 
    Champions of renewable energy say state-run utility Korea
Electric Power Corp's (KEPCO) dominance in nuclear power and
decentralised, politically-driven regional government policies
keep renewable energy from becoming cost-effective. 
    Power cost remains a key advantage for industries such as
Samsung Electronics  005930.KS  and SK Hynix  000660.KS . A
single power failure can cause hundreds of millions of dollars
in wafer losses and even global disruption in chip supply. 
    South Korean businesses paid $0.075 per kWh of electricity
as of June 2021, less than $0.120 in the U.S. and $0.254 in
Germany, according to Global Petrol Prices. 
    But this is likely unsustainable. KEPCO  015760.KS 's
earnings have deteriorated sharply since 2020 with more losses
expected this year.
    And few expect Yoon's election to immediately revive the
boom days for exports of nuclear plants, like the one in 2009,
when a South Korean-led consortium won a $20 billion contract to
build four nuclear power reactors in the United Arab Emirates. 
    Government policy "keeps changing and changing," said an
official at a 55-person nuclear subcontractor who declined to be
identified. 
    "No one wants to come to work here, so there's no manpower
to replace people leaving." 
($1 = 1,205.5100 won)

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GRAPHIC - South Korea's power mix    https://www.datawrapper.de/_/LV8Br/
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 (Reporting by Joyce Lee
Editing by Jack Kim and Shri Navaratnam)
 ((joyce.lee@tr.com;))